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Applying Al Brooks' methods to the daily forex chart
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Applying Al Brooks' methods to the daily forex chart

  #1 (permalink)
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Applying Al Brooks' methods to the daily forex chart

Hi everyone,

I have been trading forex pairs on the daily chart.

I like to think of the year's daily candlesticks as being similar to a daytrader's 5 minute chart throughout the day. Therefore, the terms "swing" and "scalp" can definitely be applied to either time frame. For example, a "scalp" on the daily chart is the same thing as a scalp on a 5 minute chart - a trade that has high probability, but low reward/risk and is held for a relatively short time (like part of a day or maybe a few days depending on the volatility of the market). I think a H2 or L2 trade on the daily chart can have a "scalp" portion, like taking half off after a certain amount of ticks profit beyond your entry price.

But before you literally do exactly the same thing on the daily forex chart as Al Brooks does on the ES 5 minute chart, you need to define some key variables. For example, the minimum scalp size.

So then... what is the "minimum scalp target profit" for a daily chart for, let's say, the EUR/USD? Obviously it's not "10 pips" like Al Brooks advises to use as a minimum scalp on the 5 minute chart, but how can we calculate such a figure? Would it have to do with the average size of the bars or pullbacks from the previous years?

Most forex traders on the daily chart try to catch big swings and hold positions for weeks, but I think they are missing a lot of great opportunities. Moreover, the forex market pairs do not even trend very often. When they do, there theoretically should be great opportunities to enter and exit trades throughout the trend. These past months, the EUR/USD has had exciting price action and great setups, and so have many other USD crosses. However, you can't hope for great trends all the time throughout the year. So there needs to be a way to attack this market's daily time frame with price action techniques, and treat every bar like you would a 5 minute bar on an intraday chart.

On a side note, are there any price action traders here that take numerous trades, both "swings" and "scalps", on the daily chart throughout the year? I define a scalp as a high probability trade that has a low reward/risk ratio.

Thanks.


Last edited by mangolassi; March 12th, 2015 at 02:56 PM.
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  #3 (permalink)
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I will recomend reading Walter Peters book "Naked forex"
He uses candlesticks + S/R lines like Al Brooks. But he uses higher time frames like D1 & H4.
I found his book to be a little easier to read.

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sharpshoota View Post
I will recomend reading Walter Peters book "Naked forex"
He uses candlesticks + S/R lines like Al Brooks. But he uses higher time frames like D1 & H4.
I found his book to be a little easier to read.


Hi sharpshoota,

Thanks for the reply. However, I am not looking for any new material to study, as I have found Al Brooks' material to be excellent and the only thing I need. I have already been making profitable swing trades.

After thinking this through, I think it's better to define the scalps with a minimum reward/risk ratio rather than minimum tick size.

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